On August 15, the U.S. Department of Housing and Urban Development (HUD) released a revision to long-burdensome regulations on FHA-insured mortgages for condominium homeownership.  The changes are scheduled to go in to effect on October 15, 2019.


This revision includes, but is not limited to, the following changes/additions:

  • Approval term of entire property/project now extended to 3 years (formerly 2 years).
  • Simplification of approval recertification process.
  • Exception now available to entire property/project reserve fund minimums (currently 10% of the association’s budget), if a reserve study, completed in the past 36 months, justifies the lower reserve amount.
  • Adjustment to the owner-occupied and investor-owned ratio approval minimum to 35%.
  • Adjustment to the mixed-use commercial and residential ratio approval maximum to 45%.
  • Adjustment of the FHA-insured to non-insured mortgage concentration to 75%.
  • Expansion of “spot approvals”, or approval of a single unit when the entire property/project is not approved.


Simply put, these changes broaden the opportunity for millions of potential homebuyers to purchase condominium units with FHA-backed loans. FHA loans are a popular choice for many first-time homebuyers, as the program requires a down-payment as low as 3.5% and credit score requirements are lower than most conventional loans.


Condominium association board members and property managers should stay apprised of the FHA-insured mortgage approval guidelines, as compliance is not only a good measure of association health but also an opportunity expand the pool of potential buyers when a unit is for sale.


If your condominium, townhome, or homeowner association is concerned about due diligence during the sale of a unit, do not hesitate to contact our firm.

Since 1983, KSN has been a legal resource for condominium, homeowner, and townhome associations. Additionally, we represent clients in real estate transactions, collections, landlord/tenant issues, and property tax appeals. We have four office locations, serving hundreds of clients and thousands of communities throughout Illinois, Indiana, and Wisconsin. Our attorneys are also licensed in Arizona, Florida, and Missouri.

If our law firm can be of assistance, please call 855-537-0500 or visit www.ksnlaw.com.


This article is made available by the lawyer or law firm publisher for educational purposes only as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By reading this article you understand that there is no attorney client relationship between you and the article author. This article should not be used as a substitute for competent legal advice from a licensed professional attorney in your state. © 2019 Kovitz Shifrin Nesbit, A Professional Corporation.